5 tips to stay on top of your personal finances
3 MIN READ
We caught up with Frank Conway, financial literacy expert and founder of MoneyWhizz, who shared his top 5 budget tips to help you stay on top of your personal finances.
Tips for staying on top of your finances
1. Create a personal or household budget using bank statements and receipts
2. Set a regular time to check on your spending once a week
3. Set up a rainy day fund for life’s emergencies by taking a 30-day challenge
4. Identify your overspending ‘blind spots’ and challenge them
5. Spend time setting financial life goals for the future
1 Get started, today, by creating a personal or household budget
Done is better than perfect
Fewer than half of people surveyed say they always read their bank statements.
Some do from time to time. Some say they never check them.
Time to take a deep breath and peek through your fingers at your bank and credit card statements to work out your weekly or monthly income and expenses.
Write down a list of all expenses for things you absolutely need and what they cost.
Things like mortgage/rent payments for your home, gas, electricity, broadband, food and transport.
Then add all other expenses (use your statements to guide you).
Your aim is to work out exactly how much income you need to pay for all necessary expenses.
That number is the start to getting on top of your finances.
You might want to take a look at the MABS online budget tool.
2 Make your spending visible by setting time to check spending
What you can see you can control
Now you’ve got an idea of how much money you earn and how much you spend each week/month.
But to keep sight of your spending and stay in control you need to schedule ‘budget time’.
Set a time (at least once a week) to sit down and check how much you’re spending and what you’re spending your money on.
Regular spending on rent, mortgage, insurance, utilities, for example, won’t change much week to week, month to month.
But things like fuel, groceries and nights out might.
Are there areas where you’re spending too much and would like to cut down? Are there things you need to save for?
3 Start saving into a rainy day fund
Kickstart a 30-day challenge to create a rainy day or emergency fund
Life’s little money emergencies – a broken washing machine, a boiler on the blink or a couple of months between jobs – often happen when we least expect them.
But setting money aside in a rainy day fund can help us survive them without having to borrow money.
How much do you need to stash away?
Ideally, enough money to cover the cost of 3 months’ essentials.
So if your rent/mortgage, utilities and food etc. cost €1,000 you’ll need €3,000.
This may sound daunting so how about taking a 30-day challenge to get started?
Save a small amount every day for 30 days. €5, €3 or just €1 a day – you can start with any amount.
The most important thing is to start.
4 Watch out for overspending blind spots
Challenge the numbers (or get a friend to challenge them)
It’s not unusual to struggle to stay on top of a budget at first.
Sometimes, that’s because life just keeps throwing curveballs at us for a while.
Sometimes it’s because we’re not brutally honest about what we spend our money on.
Budgeting isn’t just about recording the numbers. It’s also about challenging the numbers.
But it’s not always easy to admit we have blind spots.
Often the things we overspend on are the things we love most.
In this case, a successful strategy is record-and-question.
Record your spend, each time you spend, and question if there are ways of reducing your costs to a more affordable amount.
While we’re at it, you might want to check your credit rating to see what information is available to lenders about you.
5 Make it personal by setting financial goals
What do you want to achieve with your money?
If you don’t know where you’re headed, how will you know when you get there? So what are your personal goals?
What do you want to achieve?
Think 6 months ahead, 1 year, 3 years, 5 years.
Whatever your longer term goals, take things step by step and allow for life’s little hiccups.
If you plan to put a set amount of cash aside each month, plan for months where other financial needs mean you have to break from the plan for a short while.
Yes, it’s frustrating to think that things might not always go smoothly but having a realistic plan means you stand a much greater chance of getting to your goal.
Check your financial wellbeing
Views expressed are Frank Conway’s own and not necessarily the views of Bank of Ireland.